The Future of Alternative Investments Is Here, and Some Sponsors Are Already Reaping the Benefits
April 20, 2020 | Ryan Gunn | WealthForge
Straight Through Processing — the same kind of technology used to process investments into stocks and mutual funds over the internet — is currently available in various forms for some alternative investments, such as 1031 Exchange DSTs. And forward-looking sponsors are starting to take notice of the advantages.
Capital Square 1031, a leading sponsor of tax-advantaged real estate investments, has been an early adopter of straight through processing technology. “Time is money, and the quicker we can turn things around the better. Not to mention it is better for investors,” says Louis Rogers, founder and CEO of Capital Square. “The alternative investment process used to be frustrating for our investors. But we’ve now seen that, not only does it not have to be a poor experience, it can actually be a positive one. That experience benefits our investors, their advisors, and our reputation as an industry mover.”
1031 Exchanges are a $3.5 billion market, but most of that volume is still being transacted through pen and paper, rather than online. New technology platforms allow sponsors to offer a streamlined onboarding process for advisors to enter a client’s information via an online workflow that only presents fields that are relevant to the specific investor and offering type. This information can be fed into a pre-filled subscription package that can then be sent for electronic signature. Compared to a paper-process, this method dramatically reduces NIGOs from 30-40 percent to low-to-mid single digits, saving time and money as more subscriptions are submitted correctly the first time.*
